Banks Inside Walmart Stores Lead Nation In Raking In Fees From Customers

A number of different banks operate branches inside more than 1,000 Walmart stores in the U.S., and many of these banks market themselves to consumers who may not be targeted by larger institutions because of low income or lack of savings and credit. A new analysis of the institutions most frequently found at Walmart found that these banks are also the most reliant on charging fees to their customers.

The average bank in the U.S. only gets about .7% of its revenue from fees charged to customers. But the five banks with the highest number of in-Walmart branches get anywhere from 11.3% to 20% (median 12.7%) of their revenue from these fees.

And while the bank with the highest percentage of revenue from fees (Sunbank, at 20.9%) only has 12 branches, all 12 of them are in Walmart stores.

Banks generally don’t break out which particular fees contribute to this chunk of revenue, but overdraft fees are widely believed to make up the largest portion of any bank’s revenue from fees.

The CEO of Texas-based Woodforest bank, with more than 700 Walmart locations, tells the Journal that around 78% of his bank’s $271 million in fees comes from overdrafts.

While some bank customers look at overdraft fees as a low-cost alternative to payday lending — allowing them to bounce a check for a couple hundred bucks then pay a fee for the privilege a week or two later — when you actually do the math, there isn’t much difference.

The Journal talks to one Woodforest customer who knowingly overdrew her account, aware that when her next paycheck was deposited it would be dinged for a $30 fee. She believes this is cheaper than a payday loan, but the equivalent APR is around 300%.

While federal regulators have previously issued guidance calling overdrafts a form of credit, they have allowed these fees to remain exempted from the federal Truth In Lending Act, which provides some consumer protections and often requires a formal credit agreement.

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This is only logical. It’s not like those banks can make money putting the low-income peeps money to work for them. If it’s in one (metaphorical) pocket and out the other, fees are the only way they can make money.